...Costco Craze Analysis MGT/230 Costco Craze Analysis Costco, a “no frills” operation that has successfully grown into a prosperous billion dollar empire by taking pride on its goodwill practices. Currently leading as the second largest retailer, it humbly maintains its runner-up spot by practicing smart business tactics, exquisite innovation and leadership. The company’s mission revolves around ethics for profit and price, and strives for satisfaction both internally and externally. The empowering corporation expresses great dignity in its operation, structure and management. Formerly known as “Price Club”, Costco has successfully rose from the top by enforcing a smart operation that would become profitable. CEO, Jim Sinegal had a vision that that consisted of selling bulk purchase items at low prices in a member’s only warehouse. It was important to the CEO that the operation ran on four important code of ethics in mind: obey the law, take care of members, take care of employees and respect vendors (Farfan, 2013). With that ethical approach, the company set out to deliver a unique method over the traditional grocery and retail store. It was considered a bit risky to declare a purchased membership to just be able to shop in the store, memberships start out at $55.00 U.S. dollars and can be upgraded to an executive membership of $110.00 U.S. dollars annually. The membership investment offers customers the opportunity to have access to top quality items purchased in bulk at a...
Words: 1722 - Pages: 7
...Costco Inc. 2012: A Wholesale Membership Industry Analysis Using the Porter’s Five Forces Model Costco’s Company Background Costco is the third largest retailer in the U.S. as well as the seventh largest retailer in the world. It is leading the discount warehouse and wholesale club segment of the North American retailing industry. As of 2012, Costco had a total of 598 warehouses internationally. Costco’s fiscal 2011 total revenue was $88.9 billion and net income was $1.46 billion. Additionally Costco had $1.9 billion of membership fees revenue acquired from 25 million households and 6.4 million businesses making it the leader in the wholesale, membership industry. The annual sales for one of Costco’s competitors, Sam’s Club, averaged $146 million with a $78 million average per store. Costco’s business model aims to generate high sales volumes and rapid inventory turnover by offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private-label products in a wide range of merchandise category. Rapid inventory turnover, low operating costs through purchasing high volumes, efficient distribution, and reduced merchandise handling costs are the major factors that make Costco profitable with relatively lower gross margins than other wholesale competitors. Also, the membership fee required from customers is a major revenue source thataccounts for approximately 70 percent of its total revenue annually. Additionally, Costco...
Words: 2955 - Pages: 12
...Strength, weaknesses, opportunities, and threats (SWOT) analysis serves to identify the strengths, weaknesses, opportunities, and threats present within any company or organization. By conducting a SWOT analysis one can get a comprehensive picture of what they have, what they lack, what they can use more effectively, and areas that need an immediate attention. Costco’s strengths lies in its ability to remain focused on its strategy and mission. The company has identified that it strives to be a low cost provider for quality products, no frill but adequate service. Costco consciously caps their profit margin at 14 % compared to their competition which markup at 20 to 50%. They have also created a private-label brand that is 20% below comparable name-brands. The company offer high priced items at a large discount that reaches out to a wealthier clientele. Their business practice also includes treating their employees well. They pay higher wages than minimum wage and also pay close to 90% of employee benefits which include medical, dental life and disability insurance. In addition employees may opt into a 401K plan and stock purchase options with the company. Their philosophy is to treat employees well and they will have employees who are loyal and work hard to better the company. Jim Sinegal believes that employees are “ambassadors out there who are constantly saying good things about Costco. (Thompson, pg 43). Costco’s weaknesses are difficult to pinpoint. They could make...
Words: 577 - Pages: 3
...Costco Wholesale Case Analysis Management 370-3 Dr. Xu December 7, 2014 The Costco warehouse club has been in business since 1970. Founded by James Sinegal and Jeffrey Brotman. Costco has become the number one warehouse store in the world. With over 488 locations and serving 48 million cardholders in eight countries. The warehouse club keeps growing and has become a successful warehouse club. The founders created guide lines to follow to achieve their goals as an organization. Obeying the law,take care of its customers, take care of employees, respect its suppliers and reward their shareholders. The Costco Organization strongly believes that taking care of their employees and providing them a generous pay is Costco’s key to success. Costco holds nearly one hundred and twenty-five thousand highly motivated employees. It is know that Costco’s employees are one of the best paid and happy employees in the retail business. The warehouse club has become the consumers place to go to, where they will find high quality products at rock bottom prices. Moreover, the issue that Costco is facing is the continuous expansion of their warehouses globally and paying their employees more than the average salary for warehouse employees. Costco’s employees are rewarded with very generous wages, bonuses and healthcare benefits. The employees salary is about forty two percent higher than competing retail stores. This could affect the organization in the long rung. Even...
Words: 2273 - Pages: 10
...stoAnnual Report 2010 2010 year ended august 29, 2010 THE COMPANY Costco Wholesale Corporation and its subsidiaries (“Costco” or the “Company”) began operations in 1983 in Seattle, Washington. In October 1993, Costco merged with The Price Company, which had pioneered the membership warehouse concept, to form Price/Costco, Inc., a Delaware corporation. In January 1997, after the spin-off of most of its non-warehouse assets to Price Enterprises, Inc., the Company changed its name to Costco Companies, Inc. On August 30, 1999, the Company reincorporated from Delaware to Washington and changed its name to Costco Wholesale Corporation, which trades on the NASDAQ under the symbol “COST.” As of December 2010, the Company operated a chain of 582 warehouses in 40 states and Puerto Rico (425 locations), nine Canadian provinces (80 locations), the United Kingdom (22 locations), Korea (seven locations), Taiwan (six locations, through a 55%-owned subsidiary), Japan (nine locations) and Australia (one location), as well as 32 warehouses in Mexico through a 50%-owned joint venture. CONTENTS Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Map of Warehouse Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...
Words: 42703 - Pages: 171
...Costco case study and strategic analysis Costco Wholesale Corporation (Costco), one among the few largest wholesaler giant differentiates itself applying unique strategies relating to production and operations, and marketing which make it stand out from the rest of the retailers who are also said to be competitive in the retailing and wholesaling business globally. Costco is one of the innovative wholesalers teamed by very dynamic management team and dedicated, motivated and satisfied workforce with the mission “to continually provide its members the best quality products at the lowest possible prices” (Costco Annual Report 2006). Some of the fundamental principle of the Costco is that they obey the law, they take care of their members, they take care of their employees, they respect their suppliers, and finally they reward their shareholders. Some of the reasons how Costco can serve those highest quality goods of national brands for the lowest possible prices is that they eliminate different cost associated with delivery expenditures, account receivable, inventory, sales people, and fancy buildings. And they successfully operate themselves in the competitive environment serving not only an individual customers but also a legal customers (a company), and small business customers. Costco believe that society and the community is one of the key factors of their success. Therefore, they are willing to give back to their community and the society in terms of quality goods in...
Words: 3114 - Pages: 13
...Case C – Competition among the North American Wholesale Clubs: Costco Wholesale versus Sam's CLub versus BJ Wholesale 1. List the five (5) most significant strengths and weaknesses of Costco and the primary or support activities in which these strengths and weaknesses are found. Strengths * Good revenue (yearly sales over $300 million generated by warehouse with $131 million actually per store worldwide * Customer Loyalty through its loyal membership (Example of Gold Star membership) * Low cost of product and services: low pricing was one of the best strategies of Costco with top quality (lower than the offer of the competitors)-Ultra low price Policy. * Good treatment of employees as well as good wages which is a factor resulting in high the performance * A unique and exceptional Employment policy which allow people to give themselves the chance and value themselves by giving them hope about realization and any position they may acquire now or later through promotions; How they can go from just pushing card to be vice president + World’s largest seller of Wine with $597 million in only one year, 2009 Weaknesses * Weak advertisement, (just by mail) hen others are using Media, people pay more attention to media than, mails, they generally don’t have time to read commercial in the mails * Unimportance of Profit margin * No self-checkout, just thinking about being at the end of a long time, does not encourage people to...
Words: 401 - Pages: 2
...Appendix C: Organizational Analysis Costco Wholesale Corporation Introduction… The purpose of this Organizational Analysis is to discuss Costco’s current mission and values, provide a snapshot of their existing overall business model and the environment they are working in, and then discuss the key success factors required to succeed in their industry. Beyond that will be an examination of what resources (tangible, intangible, and human) and capabilities (functional and value chain) are needed to deliver on these key success factors, as well as analyze how Costco ‘stacks up’ to the competition in those areas. Finally there will be a discussion of what areas should be either improved or exploited moving forward to give Costco a more distinct competitive advantage (and therefore increased profits) in this industry. Mission, Values, and Strategy… Costco’s mission, quite simply, is to provide high quality merchandise at the lowest possible prices for its members, in an ethically responsible manner. Below is a copy of their mission statement directly off of the Costco website… The Mission Statement of Costco Wholesale: "Costco's mission is to continually provide our members with quality goods and services at the lowest possible prices. In order to achieve our mission we will conduct our business with the following Code of Ethics in mind: • Obey the law • Take care of our members • Take care of our employees • Respect our vendors If we do these four things...
Words: 3826 - Pages: 16
...SWOT ANALYSIS Group 4: Wholesale Clubs Due Date: April 13th Participants: Chelsea Jensen (Sam’s Club) Caitlin Kavanaugh (BJ’s) Julie Lehrman (Costco, formatted and submitted the document) A SWOT analysis is an analyzation on a situation which is broken up into 4 parts: Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses of a situation are internal factors that can include the development of a company or program, pricing, distribution, brand awareness, promotion market sharing, and management experience. Opportunities and threats of a situation are external factors that can include market trends, competitive activity, regulatory issues, economic pressure, and social issues. By evaluating a situation and categorizing those evaluations into the SWOT chart, you can more clearly see the past, present, and future of a situation/company. Identifying trends, analyzing the organizations competitors, accessing the organization itself, and researching the present and prospective customers are some points to look out for. As a result of a SWOT analysis, you can more clearly see how a company can: build on strengths, correct a weakness, exploit an opportunity, and avoid a threat. On the following page there is a chart that organizes a SWOT analysis on 3 different wholesale clubs: Costco, BJ’s, and Sam’s Club. Sources of information can be found on the page 3. S W ...
Words: 666 - Pages: 3
...Introduction Costco offers divers item for their customers. Their products vary from food to household furniture to clothing. Even though they offer diverse products, Costco doesn’t have the best sell in each department or some items in some department. The reasons why Costco is profiting in one department and losing in another department differs for each item. Items Costco is known for offering products in larger amounts. This can be beneficial or harmful. Listed below have the highest lift or lowest lift. Solution The reason why these have a lower lift is because the items come in larger quantities than needed, they have a higher price than a local store or customers aren’t familiar with the items. To solve this problem, Costco can start selling some items that in smaller size. Because some of the items will spoil before the customer uses it completely. This will be a...
Words: 456 - Pages: 2
...Business Analysis Part III: Costco Wholesale Corporation MGT/521 June 14, 2012 Business Analysis Part III: Costco Wholesale Corporation Jim Sinegal, Costco Wholesale cofounder and CEO summed up Costco Wholesale Corporations strategic planning and operations in a nutshell according to the Retail Industry website, “Wall Street is in the business of making money between now and next Tuesday. We’re in the business of building an organization, an institution that we hope will be here 50 years from the now. Strategic planning is an important part of running any business and the more so for businesses that operating in multiple states and countries.” On May 27, 2012, Costco Wholesale Corporation reported sales that covered a period of thirty-nine weeks. The Corporation reported “net sales of $7.67 billion for the month of May, the four weeks ended in May 27, 2012, an increase of 7% from $7.14 billion during the similar period last year” (Bloomberg BusinessWeek, 2012). The company reported net sales ending in a thirty-nine week period of $71.28 billion, “an increase of 10% from $64.75 billion during the similar period last year” (Bloomberg BusinessWeek, 2012). Many may wonder why Costco Wholesale Corporation is the leading wholesale business in the industry. To provide a good understanding of why Costco Wholesale Corporation is the leading warehouse distributor in the industry, this paper will help provide understanding by discussing strategic initiatives of the corporation and...
Words: 2001 - Pages: 9
...MEMORANDUM TO: Strategic Business Planning Committee FROM: Raquel Hansen DATE: March 16, 2014 SUBJECT: Five Forces Model Analysis As we begin to strategically plan for our business, it is important for us to take a deep dive into our competitive environment to understand where we are strong competitively and where we are weak competitively. An analysis of the forces driving industry competition using M.E. Porter’s Five Forces Model will assist us in determining where the power lies in a business situation as we begin to plan. We must understand how they work in our industry and how they affect our particular situation. Whatever the collective strength of these forces is, our job as the strategists of the organization is to find a position in our industry where our company can best defend itself against these forces or can influence them in our favor (Porter, 137). There are five important forces that determine competitive power (Pearce & Robinson, p. 99): * Supplier Power * Buyer Power * Competitive Rivalry * Threat of New Entrants * Threat of Substitution The attached Exhibit A, Costco’s Five Forces Analysis, provides a visual representation of our competitive strengths and weaknesses. I will provide an explanation of each of the five forces moving forward. Supplier Power – Weak Bargaining Power Costco has is known for its ability to leverage its buyer power making their supplier’s power weak. At the same time we recognize the need...
Words: 1191 - Pages: 5
...Performance Analysis of Costco Wholesale Corporation xxxx Strayer University FIN 534: Financial Management Professor: xxxx June 11, 2012 Costco Wholesale Corporation Higher interest rates, levels of unemployment, consumer debt levels, and unsettled financial markets are general economic factors that can adversely affect the company’s financial performance. These key elements play an important role in how a company chooses to move forward operationally and financially. Therefore, it’s imperative that we as investors understand a company’s business strategy as well as have a general knowledge of issues which may impact their decisions. Prior to investing, we should review a company’s operations, stock price, and their ratios to decide if a firm a financially stable to meet their obligations. Company Overview Costco Wholesale Corporation and its subsidiaries (Costco) began operations on September 15, 1983 in Seattle, Washington. James Sinegal and Jeffery Brotman founded it. In October 1993, Costco merged with The Price Company, which established the membership warehouse model, to form Price/Costco, Inc. In January1997, the company changed its name to Costco Wholesale and all Price Club locations were rebranded as Costco Companies, Inc. August 30, 1999, the company was reincorporated and its name was changed to Costco Wholesale Corporation. To date, the company has grown to become the largest warehouse club retailer and the second largest general retailer...
Words: 2145 - Pages: 9
...Factors on Marketing Decisions of Costco Wholesale Corporation Environmental factors consist of all the factors and activities which have a considerable impact on the running of the business. Environmental factors have a powerful impact on the normal functioning of the any business, especially in the marketing decisions (Pagell & Halperin, 2000). These factors pose challenges and threats to the success of any business. In order to deal with such environmental factors a firm should enhance its core competencies and make sound strategies (Staff, 2009). There are various factors which would have deep impact on these new services offered by the firm. The firm should make a strategy after considering these factors. David Jobber describes in his book that with the help of this analysis, the company becomes more competitive and effective to implement the various strategies (Jobber, 2001). Costco Wholesale Corporation is one of the biggest organizations in the retail industry, which operates at the global level. The company was founded by James Sinegal and Jeffrey Brotman (Costco Wholesale Corporation, 2009). On the basis of the sales volume, the company is considered among the world's largest membership warehouses (Costco: About Company, 2009). The company has taken the position of the five largest companies in the United Sates in retail Industry. The Headquarter of the company is situated at Issaquah (Washington) in the United States (Costco Wholesale Corporation Reports...
Words: 1960 - Pages: 8
...Thinking Submitted to: Ron Steffel Submitted by: Georgette McIntosh N01 Xie Luxuan Dorquidia Alemany Date of Submission: May 3, 2015 Title of Assignment: Costco Case Study CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledge and disclosed in the paper. I have also cited any sources from which I used data, ideas of words, whether quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course. Student Signature: Georgette McIntosh ******************************************* Instructor’s Grade on Assignment: Instructor’s Comments: EXECUTIVE SUMMARY he purpose of this report was to examine the implications on employees motivations used at Costco Wholesale Corporation. Research for this report included a review of he purpose of this report was to examine the implications on employees motivations A. Problem Statement: State the main problem facing the firm (or industry) in one, succinct sentence. B. Analysis: Summarize the main findings of your analysis. You may use bullet points, bold, italics – any means to convey and highlight the key factors you have determined based on your analysis. C. Alternatives: State briefly (one sentence or a bullet point each) 2 or 3 alternative courses of action that could be implemented D. Recommendation: Choose one course of action...
Words: 3517 - Pages: 15